Goldman Sachs Nearly Done With Report on Business Practices and Ethics

Eight months after a Securities and Exchange Commission lawsuit raised tough questions about its business standards, Goldman Sachs is completing a report on its structure and practices intended to quell fears that its ethics have lapsed.

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The Goldman Sachs booth on the floor of the New York Stock Exchange

As part of its annual December board meeting, Goldman directors will review a draft version of the report this week, say people familiar with the matter. Because board members may suggest changes to the report, its details won’t be released to the public until January at the earliest, one of these people says.

Those hoping for big changes to the company’s organization and conduct may be disappointed, however. Some of the recommendations mentioned in the report, say people familiar with the matter, including the spin-out of Goldman’s proprietary-trading units, are already underway. Others include a suggestion that the firm improve its financial disclosure, said one of these people.

Separately, Goldman officials are now leaning strongly toward paying out year-end bonuses to employees early in 2011, say other people familiar with the matter—though a final decision has yet to be reached.

Uncertainty over whether taxes for wealthy households would rise next year had prompted firm executives to consider the possibility of issuing bonus checks before the current tax provisions expired on December 31, these people say. But a recent accord between the White House and Republicans in Congress that would preserve lower tax rates for the wealthy has will likely make the move unnecessary, add these people.

Goldman’s business standards committee was convened in May, just weeks after the SEC filed suit against the firm, alleging that Goldman engaged in securities fraud by misleading investors about the makeup and competing interests connected to a complex security it sold in 2007. The committee’s job, according to Goldman’s May 14 announcement, was to “reinforce the firm’s client focus” and “improve upon the transparency of our activities.”

On July 15, Goldman paid $550 million to settle the lawsuit, acknowledging that its marketing materials had been incomplete.

The committee was asked to examine five areas: client relationships and responsibilities; conflict management; disclosure and transparency; structured products and their suitability; and business ethics.

It was headed by J. Michael Evans, who runs Goldman’s Asian businesses, and E. Gerald Corrigan, a former New York Federal Reserve Bank chief executive who chair’s Goldman’s U.S. bank.